The share price of AGCO (AGCO) sold off sharply this month. Is the basing and accumulation over the past several months wrong, or is this another buying opportunity? Let's examine the charts and indicators for clues.
In this 12-month daily chart of AGCO, above, we can see a December-January-February bottom and subsequent rally until earlier this month. In April, there was a golden cross, as the 50-day moving average went above the slower, 200-day moving average line.
The On-Balance-Volume (OBV) line was showing improvement, as buyers of AGCO had become more aggressive with more shares traded on days when AGCO closed higher. Recently, there are no divergences with momentum to raise flags.
In this three-year weekly chart of AGCO, above, we can see that prices have been trading sideways over the past two years. Declines into the $45 to $40 area have been bought and rallies above $55 have been sold. The 40-week moving average line is flat and prices recently broke down below it.
Looking at the OBV line on a weekly timeframe, we see some accumulation in 2015, as the line moved up, and it has again climbed some this year. The Moving Average Convergence Divergence (MACD) oscillator recently crossed to a liquidate-longs sell signal. AGCO has dipped into the $46 to $44 area recently (the top of the $45 to $40 zone noted above), and could decline deeper into the $44 to $42 area, where buyers showed up last October and in the December-January-February period.
Bottom line? Existing longs with a low cost basis should hold. No position in AGCO? I would look to be a buyer in the coming weeks in the $44 to $42 area, risking a weekly close below $41.
